A J.C. Penney Company, Inc. (NYSE:JCP) shareholder sued the retailer for its surprise decision to offer over $810 million shares leading to a substantial drop in its share price.
Alan Marcus, the plaintiff, accused the retail major of knowingly assuring investors that its business was improving and hence there was no need to raise fresh capital.
Last month, J.C. Penney Company, Inc. (NYSE:JCP) surprisingly announced its intention to offer 84 million shares of common stock through secondary offerings. The retail major appointed the investment banking arm of Goldman Sachs as the underwriter for the share sale.
Several Hedge Funds Lost Money
Recently, Perry Corp sold 9 million shares of J.C. Penney Company, Inc. (NYSE:JCP), bringing its stock-holdings from 19 million shares (8.62 percent) to 10 million shares (3.28 percent). Perry Corp’s decision to sell a significant number of shares indicates that its confidence in J.C. Penney Company was shaken after the stock price of the company suffered a sharp decline due to liquidity concerns.
Besides this, several other hedge funds are losing money from the continuous decline of J.C. Penney Company, Inc. (NYSE:JCP)’s stock, including Hayman Capital Management and Glenview Capital Management, headed by Kyle Bass and Larry Robbins, respectively.
Several other hedge funds are losing money by the continuous decline of J.C. Penney’s stock, including Hayman Capital Management and Glenview Capital Management, headed by Kyle Bass and Larry Robbins, respectively.
J.C. Penney’s Press Statement
Last month, the retail major issued a press statement emphasizing that the sales of the department store chain is growing.
The company’s press statement reads: “In response to inquiries, J.C. Penney Company, Inc. (NYSE:JCP) is pleased with its progress thus far in the company’s turnaround efforts and the traction its initiatives are starting to achieve. Moreover, the company said it is starting to see greater predictability in its performance across many areas.”
J.C. Penney’s shareholder Marcus accused the retailer of knowing it did not have enough liquidity to get through the holiday season without raising new capital, and alleged that the retailer concealed this knowledge so as not to raise concern among vendors. Marcus said that when the truth became known, investors started hammering the retailer’s stock. Last Friday, J.C. Penney Company, Inc. (NYSE:JCP)’s stock dropped by over 13 percent.
Marcus bought 300 J.C. Penney Company, Inc. (NYSE:JCP) shares on September 26, just before news of the stock offering seeped into the market. The shareholder is seeking class-action status on behalf of shareholders from August 20 to September 26. Class-action specialist firm Robbins Geller Rudman & Dowd represents Marcus.
